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EU & Competition Law Review 21 September 2016

Competition: General Court dismisses appeal against Commission's decision to accept Thomson Reuters' commitments to remedy abuse of dominant position

On 15 September 2016, the General Court ("GC") dismissed Morningstar Inc.'s ("Morningstar") appeal against the Commission's decision to accept commitments from Thomson Reuters concerning its investigation into the use of Reuters Instrument Codes.

In 2009, the Commission opened a formal proceeding against Thomson Reuters, a Canadian news and financial data company, concerning an alleged abuse of dominant market position. In 2011, the Commission adopted a preliminary assessment stating that Thomson Reuters was dominant in the worldwide market for consolidated real-time datafeeds and that it may be abusing its dominant market position. The Commission suspected Thomson Reuters may have been prohibiting its customers from using Reuters' Instrument Codes ("RIC") to retrieve data from the consolidated real-time datafeeds offered by other providers and also preventing third parties and competing providers from developing and updating mapping tables incorporating RICs that would allow systems to incorporate the consolidated real-time datafeeds of other providers. While Thomson Reuters did not accept the Commission's preliminary assessment, it offered commitments to give a license to its existing and future "Real-Time Service" customers, which would allow the customers additional RIC symbology usage rights. In 2012, the Commission accepted revised commitments from Thomson Reuters. The revised commitments reduced and simplified the fee structure and extended the scope and geographic application of the commitments.

In 2014, Morningstar, a competitor of Thomson Reuters, challenged the Commission’s decision, claiming that competing providers remained unable to offer a fully comparable and competing service, and therefore it asked the GC to annul the Commission's decision.

In its judgment, the GC noted that Thomson Reuters' commitments focused on the opportunities available to customers to switch providers, either on their own or by collaborating with a third-party developer. In order to remedy the abuse of a dominant position, Thomson Reuters did not necessarily have to include its competitors in the license terms. Furthermore, the GC observed that Thomson Reuters offered its customers and third-party developers the possibility to set up mapping tables between the RIC codes and the symbol system used by the new provider, so that modifications to the applications were not excessively costly. Therefore, the commitments represented a genuine improvement for Thomson Reuters' customers in reducing their switching costs. As such, the GC held that the Commission had not made a manifest error in its assessment and consequently dismissed the appeal in its entirety. Source: General Court Press Release 15/9/2016

On 15 September 2016, the Commission published a preliminary report on its e-commerce sector inquiry ("preliminary report"). The Commission launched the e-commerce sector inquiry in May 2015 as part of its Digital Single Market strategy. The inquiry's objective is to help the Commission identify possible competition concerns in European e-commerce markets. The Commission has gathered information from nearly 1 800 companies operating in electronic sales of consumer goods and digital content and has analyzed some 8 000 distribution contracts. The preliminary report presents the Commission's initial findings on these issues.

The report confirms the growing significance of e-commerce. It indicates that more than 50% of adults in the EU have ordered consumer goods or services online in 2015, with the figure rising to more than 80% in some Member States. The preliminary report also identifies certain business practices that may limit online competition. Concerning e-commerce of various consumer goods, the Commission has found that manufacturers have responded to the growth of e-commerce by adopting a number of business practices to better control their product distribution and brand positioning. According to the Commission, manufacturers increasingly use selective distribution systems and sell their products online directly to consumers. Manufacturers also increasingly use contractual sales restrictions in their distribution agreements, which may make cross-border online shopping more difficult. In relation to e-commerce in digital content, the Commission has found that the availability of licenses from copyright holders is essential for digital content providers and a key determinant of competition in the market. Copyright licensing agreements are complex and exclusive, as well as often of long duration.

The preliminary report is now open to public consultation for two months. Stakeholders are invited to comment on the Commission's findings, submit additional information and raise further issues. The Commission expects to publish the final report in the first quarter of 2017. Source: Commission Press Release 15/9/2016

Competition: Court of Justice of European Union dismisses appeals against General Court's judgments on prestressing steel cartel

On 14 September 2016, the Court of Justice of the European Union ("CJEU") dismissed two appeals by Trafilerie Meridionali, Ori Martin and SLM against the General Court ("GC") judgments regarding the Commission's decision on the prestressing steel cartel. In June 2010, the Commission fined 17 producers of prestressing steel approximately EUR 518.5 million for their participation in a long-running price-fixing and market-sharing cartel. In April 2011, the Commission adopted an amendment decision to correct errors in its original decision in the calculation of the fines of certain companies, including Ori Martin.

In July 2015, the GC held that that the Commission erred in calculating the fine that held Ori Martin jointly and severally liable with its subsidiary SLM. The Commission incorrectly considered sales made in countries not covered by the cartel. This led to a reduction of Ori Martin's fine. As regards Trafilerie Meridionali (formerly Emme Holding), the GC found that the Commission had erred in calculating the starting point of the fine. However, the fine itself was not reduced because it had already been capped as a result of the 10% maximum fine ceiling. Ori Martin, SLM and Trafilerie Meridionali brought further actions with the CJEU.

In the Ori Martin/SLM case, Ori Martin asked to set aside the GC's judgment in so far as it dismissed its claim that the Commission had unlawfully extended joint liability to Ori Martin for acts committed by SLM. It also claimed that the GC erred in assessing the fine. SLM raised similar pleas in seeking a reduction of the fine imposed on it on its own account and as a result of its joint liability. The CJEU dismissed the appeal, finding that the GC's judgment contained a sufficient statement of reasons because the Commission had clearly stated the reasons it could not reverse the presumption of decisive influence in the Ori Martin/SLM case.

Competition: Court of Justice of the European Union dismisses Panasonic's appeal against General Court judgment on cathode ray tubes cartel

On 19 September 2016, the Official Journal published details of a Court of Justice of the European Union ("CJEU") order dismissing Panasonic's appeal against the General Court ("GC") judgment on the cathode ray tubes cartel. According to the GC, the Commission had departed without justification from the Fining Guidelines because the Commission had not used the most accurate data available (provided by Panasonic) concerning the value of sales. The GC recalculated the fines using this information and reduced Panasonic's fine accordingly.

Panasonic appealed to the CJEU, claiming that the CJEU should set aside the GC judgment in so far as it upheld the Commission's decision or, alternatively, further reduce the fines. Panasonic claimed that the GC erred in law by dismissing Panasonic's plea of infringement of its rights of defense and right to be heard, mainly because the Statement of Objections ("SO") had neither identified nor established the specific facts contained in the evidence the Commission had relied on.

The CJEU held that the Commission may give information in the SO in a summary form. Further, the SO is only a preparatory document containing assessments of fact and of law that are purely provisional in nature. Therefore, the Commission's decision establishing the infringement is not necessarily required to be a copy of the SO. The CJEU also noted that Panasonic had been able to effectively submit its arguments in the administrative proceedings and, consequently, that the contested decision satisfied the requirements of case-law. This was because the essential evidence the Commission used to conclude that Panasonic knew of the existence of the cartel was contained in the SO. Consequently, the CJEU held that the GC had not erred in law in concluding that Panasonic’s rights of defense were respected. Therefore, the CJEU dismissed Panasonic's appeal in its entirety. Source: Case C-608/15 – Panasonic Corp v. Commission, Order 7 July 2016 and Official Journal 2016 C 343/16, 19 September 2016

Competition: Trioplast appeals to the Court of Justice of European Union about interest for late payment of fines

On 19 September 2016, the Official Journal published details of an appeal by Trioplast Industrier AB ("Trioplast") against a General Court ("GC") judgment upholding a Commission decision to charge Trioplast interest for late payment of the fines imposed for its role in the industrial bags cartel.
In 2005, the Commission fined Trioplast EUR 7.73 million. In 2010 the GC reduced this fine to EUR 2.73 million after concluding that fines on parent firms cannot exceed the subsidiary's fines. When the decision became final, the Commission asked Trioplast to pay the reduced fine, plus default interest. Trioplast agreed to pay the reduced fine but not the default interest. In 2014, the Commission sent a letter again requesting Trioplast to pay the default interest amounting to EUR 0.67 million. Trioplast paid the required amount, while expressing reservations as to whether it was obliged to pay. Later, Trioplast challenged the default interest payment before the GC. The GC dismissed this appeal and accepted the Commission's reasoning that the letter merely confirmed the situation arising from the Commission's 2005 decision and court rulings, and that it did not constitute grounds for an annulment action. The GC also held that a court ruling reducing Trioplast's fines neither constitutes a new fining decision, nor does it require the Commission to adopt a new decision.

Trioplast now claims that the CJEU should annul the GC's judgment and the Commission's decision as stated in the 2014 letter. It asks the CJEU to cancel or reduce the default interest and order the Commission to reimburse Trioplast for its expenses incurred in providing security. Alternatively, Trioplast claims damages for the same amounts. Trioplast alleges that the GC committed several errors in applying EU law: The GC allegedly erred in holding that its 2010 judgment only amended the Commission's 2005 decision, and the GC erred when concluding that the contested letter of 2014 was not a decision capable of challenge. Trioplast also claims that the fact that the 2010 GC judgment annulled the 2005 Commission decision means that default interest cannot accrue according to the terms of the 2005 decision. Finally, Trioplast claims that the GC was wrong to conclude that the actions of the Commission did not cause harm to Trioplast and the GC should thus have proceeded to try the action for damages on its substance. Source: Case C-364/16 P, Official Journal C 343/13, 19 September 2016

On 20 September 2016, the Commission fined Altstoff Recycling Austria ("ARA") EUR 6 million for blocking competitors from entering the Austrian market for management of household packaging waste from 2008 to 2012, in breach of EU competition rules. The fine was reduced by 30 per cent due to ARA's cooperation with the Commission during the investigation.

In Austria, producers of goods are obliged to take back packaging waste that results from the use of their products. They may transfer this task to a company that collects and recycles the waste for them for a license fee paid by goods' producers. ARA has been the dominant provider of these services for household packaging waste in Austria since at least 2008.

In 2010, prompted by information from operators on this market, the Commission began to investigate ARA's conduct and whether ARA had abused its dominant position. This led to a formal procedure being opened in July 2011; a Statement of Objections was sent in July 2013. In its investigation, the Commission found that the nationwide household collection infrastructure, partly controlled and partly owned by ARA, could not be duplicated. Therefore, competitors who wanted to enter or expand in the market were dependent on receiving access to this existing infrastructure. The Commission found during its investigation that between March 2008 and April 2012 ARA refused to give access to this infrastructure, so that competitors were excluded from the market and competition eliminated. According to the Commission, this was an abuse of ARA's dominant market position. Further, the Commission noted that after Austria adopted a new waste law in 2013, and ARA began granting access to its household collection infrastructure, several new competitors have entered the market.

The Commission also noted ARA's comprehensive cooperation during the investigation. As such, the Commission reduced the fine for the infringement by 30 per cent to approximately EUR 6 million. The cooperation included ARA's acknowledgement of the infringement, its assistance during the administrative process, and its proposal of a structural remedy, i.e. to divest the part of the household collection infrastructure that it owns. The Commission imposed the same structural remedy and concluded that it addresses the Commission's competition concerns, because ARA will no longer be in a position to exclude competitors from access to the relevant infrastructure.Source: Commission Press Release 20/9/2016

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